Senate Bill No. 501
(By Senators Tomblin, Mr. President, and Sprouse, By Request of
the Executive)
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[Introduced March 10, 2005; referred to the Committee
on Pensions; and then to the Committee on Finance.]
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A BILL to amend and reenact §7-14D-23 of the Code of West Virginia,
1931, as amended, relating to discontinuing the loan program
participation of deputy sheriffs who become members of the
Deputy Sheriff Retirement System on or after the first day of
July, two thousand five.
Be it enacted by the Legislature of West Virginia:
That §7-14D-23 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 14D. DEPUTY SHERIFF RETIREMENT SYSTEM ACT.
§7-14D-23. Loans to members.
(a) A member who is not yet receiving disability or retirement
income benefits from the plan may borrow from the plan no more than
one time in any year an amount up to one half of his or her
accumulated contributions, but not less than five hundred dollars nor more than eight thousand dollars:
Provided, That the maximum
amount of any loan shall not exceed the lesser of the following:
(1) Eight thousand dollars; or (2) fifty percent of his or her
accumulated contributions. No member is eligible for more than one
outstanding loan at any time. No loan may be made from the plan if
the board determines that the loans constitute more than fifteen
percent of the amortized cost value of the assets of the plan as of
the last day of the preceding plan year. The Board may discontinue
the loans any time it determines that cash flow problems might
develop as a result of the loans. Each loan shall be repaid
through monthly installments over periods of six through sixty
months and carry interest on the unpaid balance and an annual
effective interest rate that is two hundred basis points higher
than the most recent rate of interest used by the Board for
determining actuarial contributions levels:
Provided, however,
That interest charged shall be commercially reasonable in
accordance with the provisions of Section 72(p)(2) of the Internal
Revenue Code and federal regulations issued thereunder. Monthly
loan payments shall be calculated to be as nearly equal as possible
with all but the final payment being an equal amount. An eligible
member may make additional loan payments or pay off the entire loan
balance at any time without incurring any interest penalty. At the
member's option, the monthly loan payment may include a level
premium sufficient to provide declining term insurance with the plan as beneficiary to repay the loan in full upon the member's
death. If a member declines the insurance and dies before the loan
is repaid, the unpaid balance of the loan shall be deducted from
the lump sum insurance benefits payable under section twenty-one of
this article.
(b) A member with an unpaid loan balance who wishes to retire
may have the loan repaid in full by accepting retirement income
payments reduced by deducting from the actuarial reserve for the
accrued benefit the amount of the unpaid balance and then
converting the remaining of the reserve to a monthly pension
payable in the form of the annuity desired by the member.
(c) The entire unpaid balance of any loan, and interest due
thereon, shall at the option of the Retirement Board become due and
payable without further notice or demand upon the occurrence with
respect to the borrowing member of any of the following events of
default: (1) Any payment of principal and accrued interest on a
loan remains unpaid after the same become due and payable under the
terms of the loan or after such grace period as may be established
in the discretion of the Retirement Board; (2) the borrowing member
attempts to make an assignment for the benefit of creditors of his
or her benefit under the retirement system; or (3) any other event
of default set forth in rules promulgated by the Board pursuant to
the authority granted in section one, article ten-d, chapter five
of this code:
Provided, That any offset of an unpaid loan balance shall be made only at such time as the member is entitled to
receive a distribution under the plan.
(d) Loans shall be evidenced by such form of obligations and
shall be made upon such additional terms as to default, prepayment,
security, and otherwise as the Retirement Board may determine.
(e) Notwithstanding anything herein to the contrary, the loan
program authorized by this section shall comply with the provisions
of Section 72(p)(2) and Section 401 of the Internal Revenue Code
and the federal regulations issued thereunder. The Retirement
Board is authorized to: (a) Apply and construe the provisions of
this section and administer the plan loan program in such a manner
as to comply with the provisions of Sections 72(p)(2) and Section
401 of the Internal Revenue Code; (b) adopt plan loan policies or
procedures consistent with these federal law provisions; and (c)
take such actions as it deems necessary or appropriate to
administer the plan loan program created hereunder in accordance
with these federal law provisions. The Retirement Board is further
authorized in connection with the plan loan program to take any
actions that may at any time be required by the Internal Revenue
Service regarding compliance with the requirements of Section
72(p)(2) or Section 401 of the Internal Revenue Code,
notwithstanding any provision in this article to the contrary.
(f) Notwithstanding anything in this article to the contrary,
the loan program authorized by this section shall not be available to any deputy sheriff who becomes a member of the Deputy Sheriff
Retirement System on or after the first day of July, two thousand
five.
NOTE: The purpose of this bill is to prohibit deputy sheriffs
hired on or after July 1, 2005, from participating in the loan
program authorized by this section.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.